NEW DELHI(PTI): Finance Minister Arun Jaitley said India remained one of the fastest-growing economies in…
Mumbai:Hindustan Unilever, India’s leading fast moving consumer goods (FMCG) company and a barometer of consumer demand, reported a soft January-March quarter on slowing rural growth.
Sanjiv Mehta, chief executive officer and managing director, HUL, said the rural market that contributes 40% to the company’s revenues used to grow at twice the rate of urban growth earlier.
“Until the December 2015 quarter it was growing more or less at the same level. However, now it is growing at a rate less than urban,” he said.
Consequently, HUL reported a tepid 7.02% increase in standalone net profit at Rs 1,089 crore for the fourth quarter. Net sales were up 3.36% year on year to Rs 7,809 crore during the quarter under review.
However, Harish Manwani, chairman, HUL, cautioned that development should not be looked at by quarter but viewed as a trend, “And the trend is that rural has slowed down.”
Mehta said, “Rural, we had called out a year back because it was very discernable – the slowdown in trend. It has only exacerbated in the recent times. We certainly believe that monsoon should help, especially in areas where the drought is very severe. And also very importantly, the government has recognised the stress in rural that is the reason more spends have been allocated for rural.”
“Having said that, from the medium- to long-term perspective, rural is very promising and there is no question about it. The penetration and consumption levels are so low that it will certainly be picking up.”
As for strategies to deal with rural slowdown, Mehta said HUL has been increasing the advertising and promotional (A&P) spends. “We have taken the benefit of low commodity prices to invest more behind the categories, markets and brands. And one of the thrusts has been market development in terms of building the categories of the future among other things.